Jerry Storch, a former CEO of bankrupt Toys R Us, is reportedly considering reviving the toy retailer and has been working with investors and bankers to stitch his plan together.

Bloomberg reported Monday afternoon that Storch has been working with Credit Suisse Group as a financial advisor, based on the news outlet's conversations with people familiar with the situation. Talks have also included Fairfax Financial Holdings, the investment firm that acquired the Canadian unit of Toys R Us, those sources told Bloomberg.

The news comes the same week that Toys R Us finishes shuttering all of its more than 800 U.S. locations. Liquidation sales have been in place for the past few months. Party City, meanwhile, is planning to open temporary Toy City stores ahead of this holiday season....

My understanding is that Toys R Us would have been a profitable operation right up to the end, except for the negative cash flow to pay off its massive debt when it was sold to private equity firms in 2005.

We might have shopped there more, had they ever had real sales. Their “sales” were all “buy one, get one half off”, and we did not ever want two of the same type of toy, so that was no incentive for us to shop there.

They would need to move to a strong combo of bricks and mortar and online presence.

I never studied the failure of Toys-R-Us, but I think there might be some room for success in this market because children represent a different (and highly impulsive) market (i.e., children like to hold a product in their grubby little paws and want immediate gratification...at least that is my experience as a child with grubby little paws).

“I wonder though, that even if they restart Toys R Us, wont the same problems which caused issues for the company still be there?”

I think that it would restart debt free. However, the big problem wasn’t that they just made a bad decision or two and ended up in debt. The business they were in has been overcome by more agile competitors. When they started Toys R Us, I think there were no real competitor toy stores. Now, there are toys in Walmart and just about every store. Also, the type of toy has changed to be more electronic and less Tonka. Another factor is that there are fewer children now than there were in the beginning. Also, there’s the fact that anyone online and without the expense of a brick and mortar store can offer a toy cheaper and delivered to your door.

If somebody thinks they can bring back Toy’s R Us and make it competitive, they’d have to have a really new marketing idea. I just don’t see it happening. (Though, running a debt free company might make a few people rich for a while.)

the model might be, brick and mortar stores where they make real sense to have a physical store, and have a major online and delivery presence. But the online experience needs to be high excellent and work correctly.

Their trouble started once they used Chinese suppliers. Rough and tumble Hot Wheels toys became flimsy, broken within a minute of play. The same thing happened to everything else in that store. Rebuild the American supply chain and keep durable toys on the shelf. People will purchase good stuff.

I wonder though, that even if they restart Toys R Us, wont the same problems which caused issues for the company still be there?

With the Internet and other lifestyle changes they will need to reconfigure their operations but, no.

When Toys R Us was purchased via the leveraged buyout by those three investment firms they were immediately saddled with the billions that were borrowed by the firms for their purchase. They were immediately placed into so much debt they could do nothing to to survive.

They may be able to come back as a smaller and leaner operation that could survive as both a brick and mortar operation as well as an Internet seller.

When a company fails, most of the blame is due to poor management. One shining example is railroading. The railroads here in the east were total losers for decades; then along came NORFOLK SOUTHERN, and suddenly railroading is profitable again. And I say it’s all thanks to wise management.

19
posted on 06/27/2018 2:45:31 PM PDT
by Tucker39
("It is impossible to rightly govern a nation without God and the Bible." George Washington)

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